ProfessorMelissa A. Hale
CaseCast™ – "What you need to know"
Brief Fact Summary. Before his death, the Plaintiff, Scothorn’s (Plaintiff), grandfather made a promissory note to pay Plaintiff a set sum per annum if she would give up her employment as a bookkeeper. At the time of his death, the grandfather paid one year interest on the note and stated his regret he was not able to pay the rest. The Defendant, Ricketts (Defendant), the executor of the estate, refused to pay the remaining balance.
Synopsis of Rule of Law. Where a note is based on a promise and the donee changes his position based on the promise then a contract is formed under the doctrine of equitable estoppel.
Estoppel. Equitable estoppel is the effect of the voluntary conduct of a party whereby he is absolutely precluded, both at law and in equity, from asserting rights which might perhaps have otherwise existed, either of property, of contract, or of remedy, as against another person who in good faith relied upon such conduct and has been led thereby to change his position for the worse, and who on his part acquires some corresponding right either of property, of contract, or of remedy.View Full Point of Law
Issue. Should the Defendant be precluded from challenging the validity of the contract based on the theory of equitable estoppel when there is a lack of consideration?
Held. Yes. Affirmed
When one intentionally influences another to alter her position, it would be inequitable to permit the promisor, or his executor, to resist payment on the ground that the promise was given without consideration.
The court views this contract as enforceable under the principle of estoppel, rather than on the ground of consideration. The fact Plaintiff is not bound to refrain from working does not support an action under consideration. But when the payee changes her position to her disadvantage, in reliance on the promise, there are grounds for equitable estoppel.
Discussion. The fact that there is no consideration does not preclude the enforceability of the contract. The fact that the Plaintiff was induced to rely on the testator’s promise, makes it inequitable to later claim lack of consideration.